Income Tax in the Netherlands
When you live in the Netherlands you pay tax in the Netherlands on your income, on your financial interests in a company and on your savings and investments. The Tax and Customs Administration (Belastingdienst) collects income tax.
Types of income tax
You are subjected to pay tax on your income when you live in the Netherlands. Some of your expenditures may be tax-deductible.
For tax purposes, income is divided into three categories (known as boxes).
- Box 1 - Income from work and home ownership
- Box 2 - Financial interests in a company
- Box 3 - Savings and investments.
Tax on income from work and home ownership (box 1)
In box 1, you pay tax on your taxable income from work and home ownership.
Income from work includes:
- salary, tips or business profits;
- benefit, pension, annuities and maintenance payments;
- income from abroad;
- income earned as a freelancer, childminder, artist or professional athlete.
Income in box 1 is taxed at a progressive rate with four tax brackets. Once you have reached the state pension age, a special rate applies. The government intends to reduce these four tax brackets down to two in 2021.
| Box 1 Tax Rate 2022 | ||
| Tax bracket | Tax rate | |
|---|---|---|
| € 0 - € 69,397 | 37.07 % | |
| € 69,398 and upwards | 49.50 % | |
| Box 1 Tax Rate 2023 | ||
| Tax bracket | Tax rate | |
|---|---|---|
| € 0 - € 73.071 | 36,93 % | |
| € 73.071 and upwards | 49.50 % | |
Deductible items and tax credits
Some expenditures are deductible from your income from work and home ownership (personal allowances). The tax is calculated on the remaining amount. Your tax credits are then deducted, leaving the amount of tax payable.
Tax on substantial interests (box 2)
In box 2, you pay tax on any substantial interests. You have a substantial interest if you, or you and a tax partner together, own at least 5% of the shares, options or profit-sharing certificates in a company. You pay 25% tax on income from substantial interests.
| Tax year | Tax Rate |
|---|---|
| 2022 | 26.90 % |
| 2021 | 26.90 % |
Savings and investments (box 3)
You pay tax on income from your wealth, including savings, shares and a second home. It is calculated as the value of all assets (such as savings and shares) minus any debts. Part of your wealth is not taxable: the capital yield tax allowance. You pay 30% tax on your taxable income from savings and investments. The government assumes a fixed return, which varies, depending on your savings and investments.
| Total asset | Tax rate over total asset |
|---|---|
| € 0 – € 50,649 | 1.82 % |
| € 50,650 – € 962,349 | 4.37 % |
| € 962,350 and over | 5.53 % |
FAQ about Income Tax in the Netherlands
What is the income tax rate in the Netherlands for 2022?
The income tax in the Netherlands for 2022 is 37.07 % between € 0 - € 69,397 and 49.50 % between € 69,398 and upwards.
Are taxes high in the Netherlands?
The Netherlands is considered a Welfare state, where higher earners pay up to 49,5% taxes over their salary. This is lowered considerably the last years but is still high compared to other countries.
Who pays taxes in the Netherlands?
If you live in the Netherlands or receive income from the Netherlands, you will have to pay income tax in the Netherlands. You will have to pay taxes in the Netherlands on your income, on your financial interests in a company and on your savings and investments.
What is the income tax rate in the Netherlands for 2023?
The income tax in the Netherlands for 2023 is 36,93 % between € 0 - € 73.071 and 49.50 % between € 73.071 and upwards.
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